So you want to buy a house. You’ve decided how much mortgage you can afford, met with a realtor, and seen plenty of houses. Once you find a home that fits your needs it’s time to make an offer.
Making an offer on a home is actually pretty simple. Your Realtor will run a Comparative Market Analysis: he or she will look at home sales in the last year—searching for houses that are similar in size, location, and amenities. You and your Realtor will discuss the price you wish to offer, and then the offer is written.
A pre-approval letter and earnest money usually accompany the offer. The pre-approval letter tells the seller that you can afford the home, while the earnest money, typically 1 percent of the offer price, simply lets the seller know that you are interested in the property. This money may later be used toward closing costs or returned after the closing or if a price cannot be agreed upon. Many offers also include an inspection contingency, which means that once the buyer and seller agree to a price, the buyer will pay for an inspection (typically $300-$400), once he or she receives the results, the buyer has the option to ask the seller to pay for some or all of the repairs, lower the offer price, or ask for money to make the repair themselves. There are other items that the buyer may ask for in the offer price, some of the common items are appliances, window treatments, and furniture. The seller may accept the initial offer, or they may respond with a counter offer. When both the buyer and seller agree on a price, the offer becomes a contract.
Once the final offer price is agreed upon, the buyer will file the final paperwork for the mortgage. This will include the final price minus the down payment (usually 10-20 percent of the final price), plus taxes and fees.
The mortgage industry has made some significant changes in the loan approval process to ensure that potential homeowners and lenders are both covered. What does this mean for potential homebuyers? Basically, more paperwork and more information are needed before their credit is approved. Lenders are taking their time to approve home buyers. They want to make sure that any home buyer will be able to repay the loan.
Josh Anderson is a Realtor with Keller Williams Realty in Nashville TN. If you have any questions about the real estate market, please call (615) 509-7000, email Josh@JoshAndersonRealEstate.com, or visit www.JoshAndersonRealEstate.com.